‘Naira devaluation bad for businesses’

The effects of devaluation of the naira and falling oil price have permeated key sectors of the economy, including the PayTV industry. MultiChoice Nigeria Limited Managing Director John Ugbe speaks to COLLINS NWEZE on his company’s operations, the business environment and how naira devaluation is raising business cost.

How will you describe the business environment and the economy?

It is unique, in the sense that it is not like any other in the world. That’s what makes us Nigeria and makes those of us who live here Nigerians. And a lot of people would say the situation is very tough and rough. No, we don’t say that. We see it is unique. We believe that to be able to succeed in business here, you can’t be one of the briefcase carrying firms. We believe you have to be a Nigerian business like we have been. If the environment is unique in its way, the only way to succeed is to understand and know how to take advantage of the opportunities that the environment throws up.

So, there’s a lot of traffic in Nigeria, especially in Lagos. This influenced our decision to launch a mobile TV- the first of its kind in Africa. So you have your TV screen in your hand, in your car and we were able to solve the problem where most people will be rushing to watch the Champions League by 7:45 pm and be stuck in traffic.

That shows you we took the local environment into consideration. Did we try to stop the traffic? No. Did we try to move the matches? No. We couldn’t but we came up with a solution that was able to adapt to the lives of Nigerians. That’s how we have treated what people perceive as challenges in the local market. When we started out, you needed to have a very big dish, 2.4 meters. But we knew that couldn’t work too well in a local environment, we pioneered the launch of a satellite to cover Nigeria. We were able to reduce the size of the dish into smaller ones that are now prevalent everywhere you go.

Does the Mobile TV service come with additional cost?

No. If you are a premium subscriber with us, you get the Mobile TV at no additional cost. And now, we have got an application on the iPhone, android phones for the same principle: as a premium subscriber you get additional content on the move while using local data to connect.

Tell us some specific challenges you face in this market?

The challenges we face are the challenges everyone else faces. So, infrastructure could be better. I believe there are some initiatives now to improve power. You need power to be able to watch TV. So, I think there are a lot of changes going on with privatisation of power. I think we can see some positives coming out of it. So, as with everyone else, we hope that this becomes more positive and we can see an improvement in infrastructure and this can affect and grow the local economy. For us, we are very proud that for the first time, the impact of entertainment on the Gross Domestic Product (GDP) was identified and it was identified when Nigeria’s GDP became the largest in Africa.

This is quite significant given that at over five per cent, we think that there’s an opportunity to grow that into 40 per cent especially with what is happening with oil price today. We need more of investment in entertainment industry and also more capacity building. That’s what we are at the forefront of doing.

It is difficult to discuss business in Nigeria today without speaking on the impact of the falling oil price. Are there specific issues being faced by your industry because of oil price slide?

Look, the oil price decline has put pressure on the naira. It is something that affects everyone who is in business. Obviously, we would have loved to have a much stronger naira because it gives us the opportunity to manage our cost better.

What is the biggest challenge you are tackling in this industry?

I can’t think of a bigger challenge. Like I said, it is capacity building. In the past, we couldn’t even find programmes to buy. They are available now. We move on to the next thing which is quality of programmes. There are lots of master classes, a lot of development of sound and lighting that are going on.

When we wanted to drive a lot of quality, our sister company, Africa Magic, came up with the African Magic viewers’ awards. Now we are rewarding excellence and this has led to producers striving harder to do better movies. When we started with content, everybody laughed at it, but now they are beginning to take it serious.

I foresee a future where this industry will be bigger than Hollywood. There is more content being produced here. With much more content being produced here that are of better quality, we will have the opportunity to grow bigger than Hollywood. I think we try not to focus on challenges, we try to focus on how we can turn them around to becoming opportunities for all.

What has led to the high acceptance level of MultiChoice Nigeria services within the local market?

It is our ability to remain in business; not just remaining in business, but to keep providing entertainment. That’s primarily what we want to do, putting smiles on peoples’ faces. It is also a fact that as a Nigerian company, MultiChoice Nigeria has always understood the local market, remained innovative and evolved with services. It has always remained ahead of the curve to ensure that we know what people want and provide such services.

When we started, there were lots of emphases on international content, but we believe that the best content will come out of Nigeria. And when we say the best content, I am referring to the music industry which we started supporting very early when Nigerian music was almost dead.

We are the strong foundation for the TV Content Business, popularly known as Nollywood. We were also expanding to sports. Last weekend, I saw a lot of people on Twitter talking about football match in Aba, which when you look back, you will ask when was the last time people talked about a match in Aba? When you look at that, it comes from us investing very early in the sector. There is time for developing. We have to continuously adapt, trying to provide the best as far as entertainment is concerned.

Are there some specific steps you have taken to develop this market, which you would want to mention?

We have invested over N30 billion in developing content in Nigeria. I think that alone tells you how much we believe in this market. It is our market. It is where we do business. It tells you we are in it long term. We are not into buying and selling. We are into working on backward integration.

Where this content did not exist, we took the risk of investing and creating it. Even when nobody is sure that we are going to watch it. Now, we have these content being appreciated internationally. Nigerian artists are performing everywhere in the world. We are proud to be the foundation of it.

Since these programmes are being watched globally, how do you recoup your investment?

Our business has always been to be able to recoup our investment. Sometimes, through subscription locally, and also internationally through partnerships, we are able to sell some of these contents.

But also, as a proud Nigerian, the benefits are not only monetary, but are being able to fly into an airport in Zambia and someone walks up to me and say, how you are sir. Or when someone speaks Igbo, Yoruba or a little bit of Hausa, you are almost shocked initially. But something comes to your mind: you are in this position for people to be able to see us.

How will you describe the broadcast industry in the country and regulation?

There is robust regulation. We have been at the forefront. We have always partnered with the National Broadcast Commission (NBC). We like partnering with regulators. We want to ensure there is proper capacity development, and to stay within the regulation. I think that has been critical for us. That’s why we have been able to remain in business.

Are there areas you think that the NBC should improve on, in the interest of the sector?

There is always room for improvement. The industry itself always does a kind of self regulation. Broadcast is very strong and important for every nation. So, we have to be able to look inwards ourselves and help the regulator ourselves.

You have embarked on some projects in line with your firm’s Corporate Social Responsibility. What motivated you to do such?

We have always believed in investing in our communities. The MultiChoice Resource Centres are at the forefront of what we do as CSR. We go to public schools and instruct teachers on how to use audiovisuals to teach, install equipment and provide DSTV Learning Centres in those schools and help the students learn better. Recently, we went back to some of the schools, and we were able to meet some of the students who are now in the university, some of them in medical schools. We asked them what the impact was. It was great impact that one can learn, and be able to learn from what he sees. We have learning channels, which are very powerful on this channel and we have been able to bring that into the classroom for public schools.

We are also very active in supporting the Sickle Cell Foundation, we have worked with the Lagos State Government, adopt a school, and a lot of other smaller initiatives that we do to support the communities where we do business.

Your tariff was increased recently. Why did you take that decision at this time of economic hardship in the country?

I think in as much as we want to remain responsible to our communities, societies, and also to our shareholders, one thing you see in PayTV is that the cost of your content keeps going up. For instance, when Manchester City Football Club in the United Kingdom signed a player at £49 million from Liverpool and Man City Fans are cheering, I say, you know at the end of the day, you are going to pay for this because the club needs to generate money somehow.

And you know, one of the ways of generating money is TV rights and almost every year, you must be sure what TV rights will cost you. So, that’s just one example.

Again, you will never hear that an actor is earning less than he was earning two years ago. No, he will always earn higher. Every new movie, actors are paid higher than they were paid, the last one. So, unfortunately, all these cost inputs grow overtime. It is just the reality that we will have to sometimes, or once in a while, increase those rates to be able to pay for those wonderful content and remain in business.

Do you agree that your near monopoly status in the industry has influenced your tarrif increase even against the peoples’ wish?

Well I don’t believe that. I have always asked people: how do you define monopoly? We are not one and we are not even close to being one. We wouldn’t want to do anything that would damage our own business. Don’t forget we are into entertainment. So, I think the core thing is to be able to offer that service; to be able to continue to be in business, we have to be able to cover those costs.

It is not an easy thing for us. And then we have the devaluation of the currency which also makes it even more difficult for us to do business.

Don’t forget you have to pay your satellite costs and for contents. So, not only is that price increasing, but we also have a case now where we are spending more in naira in order to afford the same thing we could afford last year.

So, it’s quite a complex mix and we have to try as much as possible to absorb a lot of it, to be able to offer something that’s affordable. But also, what we have done over the years is that we made sure that we created different subscription bands. So, till today, we still have subscription that is for N1,000.

So, for N1,000, you can still subscribe for our GOTV service. We don’t take our service out of the reach of the average Nigerian.

How much does it cost to buy content for the Nigerian market?

I can’t give you that figure. It means telling my competitors how much to get content. Your content deals even with the local industry are confidential deals. So, I will be flouting that confidentiality if I put a figure to it. But what I can tell you is that we invest billions of naira every year including through our sister company, Africa Magic. They produce some content and I think that has really aided the growth of the Nollywood industry.

Some people are thinking that the tariff in Nigeria is the highest in Africa. Can you give us insight into what happens elsewhere?

It is not the highest. In as much as we always insist that this is MultiChoice Nigeria. So, I have to take my local environment, my cost of buying content into consideration to determine the pricing locally. However, I always challenge anybody who has told us we are the most expensive in the world or in Africa that we are not. I believe that with the advent of the internet, everybody can check that we are not. We are very well priced and that takes into consideration what we do locally.

Take a look at the African Magic Channels and see how much of Nigerian contents are on it. That will show you clearly that we do buy a lot of contents locally. We have two major Nigerian languages having full 24 hours dedicated to them, at a big cost to us.

Why can’t you let subscribers pay based on time used as done in the telecom sector?

Unfortunately, like we have explained this in a couple of fora, our business is not the same as the telecom business. Telecoms are not selling you any content, you dial and make the calls, you originate them. You are the content. So, we unfortunately have to buy and broadcast. So, broadcast media is one to many. It is not a one to one communication.

I don’t even know where to begin to bill you. But also, that’s how the entertainment industry works. If you buy a ticket to go and watch a football match and you decided to leave after a half time, do you get a refund?

What you paid for is a football match. So, imagine how I would have to pay the man who makes a movie, how would I pay him for that movie if I tell him that in the middle of watching the movie, maybe half of the people stopped watching the movie. It makes buying content almost impossible because there is no agreed way I would get revenue and how I would end up paying for the cost.

Tell us something more about the competition. What gives you an edge?

We are always focusing on ourselves despite what the competition is doing. We have a long term plan for the business and even if it means investing ahead of the curve or forgoing profit at a certain point to develop the business. We focus on what we do. We try to do things much better than we did it in the past.

We are really committed to Nigeria as a country. We look at Nigeria, we know we are here to stay and we started local content. I look forward to the day we would see people going back to wear an Enyimba T-shirt or Stationery Stores jersey because that’s where we want Nigerian football to go.

We have eight outside broadcasting vans in this country. If I tell you how many people it takes to cover one football match, it would take a crew of sometimes 50 to 60 people travelling 10 hours on the road, staying days. That’s what it takes to cover one football match and we have to do that often.

If Warri Wolves is playing we have to cover that, then we go and cover another one at Asaba. These are all being run by Nigerians. We have Nigerians trained, developed and this are people right now invited to cover games by Federation International Football Association (FIFA) and Confederation of African Football (CAF) around the continent.

They are the best in the business. That’s not something you wake up in the morning and just hire people. It takes time to train and make sure you have the best. That is the focus and it is what we believe in generally.

What is your projection for the company in the next five years?

I think it’s a very difficult one. What we see is growth. We see a bigger local content offering coming out of us. There will be lots of investment in football, basketball; we are taking on boxing now and few other sports. And then, we are looking at movies, there is a lot of commissioning going on. So, I see a lot of growth, not just from subscriber perspective, which we definitely believe and hope we will grow, but also content which we dish out to our subscribers.